Civil asset recoveryParallel proceedings
Is there any restriction on civil proceedings progressing in parallel with, or in advance of, criminal proceedings concerning the same subject matter?
Civil proceedings can be conducted in parallel with criminal proceedings, as long as the subject matter is not identical to the criminal matter. The claimant who chooses to bring the case to the civil court first is not entitled to bring the case before a criminal court, unless the Public Prosecutor’s Office brings the case before the criminal court prior to any decision on the merits (article 5 of the French Criminal Procedure Code). In any case, civil courts remain competent in summary proceedings, to prescribe all necessary interim measures, even if the claimant has already brought a civil action before the criminal court (article 5-1 of the Criminal Procedure Code).
The only circumstance in which the civil judge is required to suspend proceedings would be in the case where the sole purpose of the civil action is to compensate the damage caused by the offence on which the criminal court is ruling. In all other cases, the civil judge would not be compelled to suspend civil proceedings, even in the case where the decision to be rendered by the criminal court may have a direct or indirect impact on the outcome of civil trials (article 4 of the Criminal Procedure Code).Forum
In which court should proceedings be brought?
Civil proceedings are generally brought before either a local court of first instance (to hear and determine private claims for an amount up to €10,000) or the high court of first instance (to hear and determine private claims for an amount over €10,000), which are the first instance courts. As regards business matters, commercial courts handle cases on commercial transactions, commercial acts or litigation between professionals.
With respect to civil recovery proceedings, the French legislator concentrates enforcement litigation matters in the hands of a specific judge, the enforcement judge (JEX). As an exception, the JEX shares its jurisdiction for preventive measures with the president of the commercial court, when the commercial court has jurisdiction on the claim at stake (article L.511-3 of the Code of Civil Enforcement Procedures).
French civil procedure law provides claimants with the possibility to file their claims before one of the two places of their choice with respect to civil asset recovery proceedings: either the JEX of the defendant’s domicile, or the JEX of the place of enforcement of the measure, except in cases involving (i) the seizure of immovable property (place where the property is located), (ii) the attachment of bank accounts (debtor’s domicile) and (iii) the seizure and sale of movable property (place of the measure to be implemented).Limitation
What are the time limits for starting civil court proceedings?
The general civil limitation period is of five years from the day on which the right holder became aware or should have become aware of the facts enabling him or her to exercise his or her right (article 2224 of the Civil Code). With respect to liability claims arising out of an event resulting in personal injury or in compensation for direct or indirect, victims are time-barred after a period of 10 years from the date of consolidation of the initial or aggravated damage (article 2226 of the Civil Code).
There are also some specific limitation periods applicable to certain disputes, such as actions concerning the manufacturer’s failure to comply with the duty to provide advice, exceeding deadlines or costs, or violating urban planning rules, which must be initiated before the expiry of a ten-year period.
Ultimately, all enforcement orders are time-barred after 10 years according to article L.111-4 of the Civil Enforcement Procedures Code.Jurisdiction
In what circumstances does the civil court have jurisdiction? How can a defendant challenge jurisdiction?
The jurisdiction of a civil court is determined according to its substantive jurisdiction and its territorial jurisdiction.
With respect to the material jurisdiction, French law offers a general jurisdiction to a local court of first instance or the high court of first instance for all private disputes depending on the amount disputed (see question 2). Moreover, the the high court of first instance has exclusive jurisdiction on specific matters related to compensation for bodily injury, class actions, successions and insolvency proceedings, whereas the first instance court has an exclusive jurisdiction concerning litigation associated to lease agreements.
With respect to territorial jurisdiction, the jurisdiction should depend on the defendant’s domicile or residence. In the event of several defendants, the plaintiff shall, at his choice, bring an action before the court of the place where one of them resides (articles 42 and 43 of the Civil Procedure Code). If the defendant’s domicile or residence is unknown, the claimant may apply to the court of the place of his or her own domicile or to the court of his or her choice if he or she lives abroad (article 42 al 3 of the Civil Procedure Code).
Under French law, the domicile is located at the place of permanent settlement, under the sovereign discretion of the judge, according to a set of indicators: payment of taxes, registration on the electoral list, receipt of correspondence, etc, whereas a residence will be determined at the place where a person resides in a sufficiently stable manner.
The Civil Code offers privilege to French nationals, which implies that French nationals may always bring an action or be brought before a French court, even if the claim is not related to France (article 15 of the Civil Code). Similarly, any foreign defendant can be brought before a French court with respect to contractual obligations entered into in France or with French nationals (article 14 of the Civil Code).
In the European Union, the Brussels I-bis Regulation and the Lugano Convention provide for a specific regime, in which the main principle is that a French defendant shall be sued in France (article 4 of the Brussels I-bis Regulation). French courts also have jurisdiction whatever the nationality of the defendant, if the place of performance of an obligation or the place where the harmful event occurred or may have occurred is located in France. Finally, courts have exclusive jurisdiction on real estate claims concerning assets located in France (article 24 of the Brussels I-bis Regulation), or if the parties have agreed on French jurisdiction over the dispute (article 25 of the Brussels I-bis Regulation), or if the defendant ‘enters an appearance’ (article 26 of the Brussels I-bis Regulation).
To challenge jurisdiction, a defendant has to raise the legal grounds justifying the lack of jurisdiction of the court and indicate in return which court should have jurisdiction (article 75 of the Civil Procedure Code). Pursuant to article 74 of the Civil Procedure Code, all procedural objections have to be raised before raising any argument on the merits in order to be admissible in front of the court. The court may be incompetent regarding the subject matter of the case (see question 2) or the territorial jurisdiction (article 42 of the Civil Procedure Code) as well as the immunity defence. The court can rule on its own motion of incompetence if the breached rule is mandatory or if the defendant does not appear (article 76 of the Civil Procedure Code). The court has to rule on the procedural objection in the shortest possible time by analysing its admissibility and its merits. In the event that the court rules that it has no jurisdiction, it has to indicate the competent jurisdiction in its judgment, except for criminal, administrative, arbitral or foreign courts (article 81 of the Civil Procedure Code).Time frame
What is the usual time frame for a claim to reach trial?
According to Department of Justice, the average time frame for a claim is around eight months before the the high court of first instance, six months before the local court of first instance, and six months before the commercial court. Nonetheless, it can take more time before a claim reaches trial depending on a number of factors, such as complexity, nature of the claim, the number of parties, the number of procedural incidents, etc. These time frames may vary from one court to another.
However, in case of urgency, parties have the possibility to bring their case via summary proceedings to request any measures based on obligations that cannot seriously be challenged and that is justified by the existence of the dispute. Even in cases where the obligation at stake can be seriously challenged, the parties can obtain interim measures to prevent immediate damage or stop a manifestly unlawful event. Usually, in summary proceedings, a decision may be rendered within a period of time ranging from three to six weeks. In the most urgent cases, it is possible to obtain a decision within 48 hours.
More importantly, French law offers a particularly efficient procedural panel of protective measures for creditors. The efficiency of such measures is due to the combination of an ex parte application in front of the JEX or the President of the Commercial Court, combined with a relatively low legal test, as the two conditions set forth by law are (i) that the creditor needs to evidence that the debt seems to be legally grounded and (ii) that there are circumstances justifying that asset recovery could be jeopardised (article L.511-1 of the Civil Enforcement Procedures Code).
The judicial authorisation is obtained through the ex parte application. Once the authorisation is obtained, the creditor can enforce the protective measure within three months against the debtor or a third party (this is often done as soon as the authorisation is granted) through the action of a bailiff, at a time defined by the applicant to surprise the debtor, and then initiate proceedings on the merits in court within one month of the enforcement measure (article L.511-3 of the Civil Enforcement Procedures Code). During this time, the protective measure is in effect, and the assets of the debtor are frozen.Admissibility of evidence
What rules apply to the admissibility of evidence in civil proceedings?
As a rule, it is incumbent on the parties to bring evidence of the necessary facts to support their claim (article 9 of the Civil Procedure Code).
Under civil procedural rules, the principle is the admissibility of evidence by all means. Each type of evidence can be used: documentary evidence, testimonial evidence, presumptive evidence, confession and oath. However, French civil procedural law provides for two exceptions to the aforementioned principle: (i) written evidence is required when the amounts at stake represent more than €1,500, while (ii) commercial transactions can be proven using all forms of evidence (article L.110-3 of the Commercial Code).
In addition, to the extent that in civil procedure, the rule that evidence has to be obtained through loyal and non-fraudulent means is severely enforced, French case-law considers that evidence is disloyal when it is obtained through the violation of a fundamental right, e.g. the right to a privacy or the right to professional privacy or correspondence. Nonetheless, in some circumstances, disloyal evidence could be declared admissible if it is indispensable to the right to evidence and if the violation resulting from the production of this evidence is proportional. Here also, French law, in absence of any discovery/disclosure proceedings, allows for a party, prior to a proceedings on the merits, to make an ex parte application to seize documents of the opposing party, including at such opposing party’s headquarters, domicile or residence, if the applicant demonstrates a legal interest in preserving or establishing evidence of facts on which the resolution of a dispute may depend (article 145 of the Civil Procedure Code). Enforcement measures entail the presence of a bailiff, IT specialists and even the police.Witnesses
What powers are available to compel witnesses to give evidence?
First, as a general rule, witnesses are not heard in front of French civil or commercial courts, as evidence has to be provided in written format. Witnesses can only testify in writing.
Second, the general principle regarding evidence is that the parties are required to use their best endeavours to assist with the execution of the investigative measures (article 11 of the Civil Procedure Code). With respect to the communication of documents and evidence between the parties, articles 132 and seq of the Civil Procedure Code provide that the party who refers to a document has to communicate it to any other party and permit the judge to order it, in the case that such communication is not done spontaneously.
Third, with regard to obtaining documents held by a third party, articles 138 and seq of the Civil Procedure Code provide that if, in the course of proceedings, a party intends to refer to an authentic or private deed to which it has not been a party or to a document held by a third party, it may ask the judge hearing the case to order the delivery of a copy or the production of the deed or document.
In that respect, the judge will pronounce an injunction to the third party to deliver the deed, under penalty payment if required (article 139 of the Civil Procedure Code). The third party may refuse to produce the document in case of legitimate impediment or difficulties. In this case, the judge may retract or modify his or her decision, subject to an appeal within 15 days.
It must be added that the aforementioned document seizure procedure provided for under article 145 of the Civil Procedure Code (see question 6) is only enforceable prior to initiating proceedings on the merits.Publicly available information
What sources of information about assets are publicly available?
The French commercial register provides many substantial information on companies (eg, name of the company, legal seat, address, SIRET number, legal form, activities, start date, latest key figures (turnover, profit), latest acts of the company). Within one month of the approval of accounts, most companies are required to submit to the clerk of the commercial court different information, such as the balance sheet, the income statement, the annex, the management reports, the general report of the auditor, and the agreement of the general meeting concerning the allocation of results. In that respect, everyone may obtain copies of these documents that could be of interest if an enforcement measure is expected.
With respect to listed companies on the stock exchange, financial information investigations or inquiries into the third parties are posted on the Financial Markets Authority’s website and on the website of the company itself.Cooperation with law enforcement agencies
Can information and evidence be obtained from law enforcement and regulatory agencies for use in civil proceedings?
Bailiffs play a key role in civil asset recovery in France, as they have a monopoly to carry out enforcement and protective measures. They enjoy specific access authorisations to databases detained either by government agencies or by banks without such access being challenged on the basis of professional secrecy or bank secrecy.
When acting for the purpose of enforcing a national enforceable title or answering an information request pursuant to article 14 of Regulation (EU) No. 655/2014, bailiffs also have access to the national file of bank accounts and similar accounts named FICOBA, which lists all bank accounts opened in France: current accounts, savings accounts, securities accounts, etc (articles L.151 and L.151 A of the Tax Procedure handbook). Bailiffs also have access to different administration files, for instance, the vehicle registration system.
A bailiff can therefore gather extensive information on the debtor’s financial situation, ensuring the recovery of the creditor’s debts. Once information is collected, it can be used during enforcement proceedings. Access to the various databases is made without the debtor being informed.Third-party disclosure
How can information be obtained from third parties not suspected of wrongdoing?
In France, there is a general obligation to contribute to justice to establish the truth (article 10 of the Civil Code). The judge may, at the request of one of the parties, ask or order the production of any documents held by third parties if there is no legitimate obstacle to its production. The judge can use penalty payment to pressure the third party to communicate the documents (article 11 of the Civil Procedure Code).
Furthermore, investigations or inquiries into third parties may be requested by any party, before any proceedings on the merits, if there is a legitimate reason to preserve or establish evidence of facts on which the resolution of a dispute may depend (article 145 of the Civil Procedure Code - see question 6). The judge may also order any possible measures provided by law (verification by the judge himself, personal appearance of the parties, investigations conducted by a judicially appointed expert) as long as they are legally admissible and do not constitute general investigative measures (Cass. 2e civ., 7 January 1999, 97-10.831).Interim relief
What interim relief is available pre-judgment to prevent the dissipation of assets by, and to obtain information from, those suspected of involvement in the fraud?
French law offers a large range of preventive measures affecting diverse assets: general protective measures (on all tangible movable property), seizure claim (by the holder of a resale right on the property), and miscellaneous conservatory seizure (on property placed in a safe, debt, shareholders’ rights and securities). Enforcement in the hands of third parties, such as debts third parties have towards the debtor of the applicant of the enforcement measure, are allowed. Moreover, a special category of preventive measures, the ‘super protective measures’ can be enforced on buildings, business assets and shares. Although the ‘super protective measures’ are subjected to more complicated proceedings and require a double publicity, their effects have a greater impact as they offer a right of resale and a preferential right allowing the creditor to be paid in priority, before all the others creditors, as soon as the assets of the debtor are sold.
The judicial authorisation to enforce preventive measures on assets is granted ex parte: the creditor does not have to go through any adversarial proceedings. Contrary to other jurisdictions, the legal test is relatively low, as the two conditions set forth by law are (i) that the creditor needs to evidence that the debt seems to be legally grounded (as opposed to the evidence of the debt being legally grounded), and (ii) that there are circumstances justifying that asset recovery could be jeopardised (article L.511-1 of the French Civil Enforcement Procedures Code). Once authorised, the protective measure against the debtor or a third party can be enforced by the applicant within three months time. The applicant has one month after the enforcement measure is executed to initiate proceedings on the merits of the matter. Once the enforceable title is granted, the creditor will have to convert the protective measure into an attributive measure with the assistance of a bailiff (ie, have the frozen assets transferred directly to the creditor). The unavailability of the assets is guaranteed during the whole period during which the creditor seeks a title in court. Such unavailability can only be interrupted if (i) the debtor challenges the protective measure in court and obtains the judicial release of the enforcement measures, (ii) the creditor fails to obtain a title, or (iii) the debtor becomes insolvent.
As a result, preventive enforcement measures offer, through the freezing of the assets, a high security to the creditor and a long period of unavailability compared to other jurisdictions, in which the legal test for obtaining the authorisation to seize assets is higher, or where the effect of an ex parte injunction is limited as the court will usually fix a date for a further hearing requiring the presence of the parties, which implies that the interim injunction will only last until the date of that hearing.
The debtor only becomes aware of the unavailability of his assets once the measure has been carried out. The opportunity to take the debtor by surprise is a valuable advantage to avoid the debtor from planning to hide or make his or her assets unavailable.
Under preventive measures, assets are unavailable, so the debtor or the third party (which can be called the guardian) cannot dispose of them while remaining the owner of the assets.
It should be noted that the same mechanism is also available, as indicated under 6, for the seizure of evidence in view of a potential litigation, if there is a legitimate reason to preserve or establish before any trial the evidence of certain facts on which the resolution of a dispute might depend: in such situation, a party may request, ex parte, an order from the judge to carry out investigative measures, which are commonly measures intended to obtain private documents (article 145 of the Civil Procedure Code).Non-compliance with court orders
How do courts punish failure to comply with court orders?
French decisions are subject to financial obligations leading generally to self-enforcement by the defeated party, however in a limited range. Punitive damages are excluded.
First, any monetary penalty pronounced in a decision is subject to legal interest that runs from the date of the judgment (article 1231-7 of the Civil Code). Then, at the end of a period of two months from the day the decision became enforceable, the legal interest rate is increased by five points (article L.313-3 of the Monetary and Financial Code).
Moreover, the judge may attach a penalty payment to the decision in order to ensure its enforcement, that will constitute an accessory of the principal condemnation, which provides an effective means of forcing the debtor to perform a specific obligation and is independent from compensation (article L.131-2 of the Code of Civil Enforcement Procedures). In the absence of voluntary compliance, the party has to bring the case to the court of enforcement in order to oblige the other party to execute the obligation. In practice, in case of abusive resistance of the debtor to execute the decision, the judge may award damages to the creditor for the prejudice suffered (article L.121-3 of the Code of Civil Enforcement Procedures).Obtaining evidence from other jurisdictions
How can information be obtained through courts in other jurisdictions to assist in the civil proceedings?
Provided that the conditions set out in the French law with respect to the taking of evidence are met, evidence may be obtained abroad upon request to the judge. The procedure is governed by articles 734, 734-1 and 734-2 of the French Civil Procedure Code, which apply in the absence of specific bilateral or multilateral convention on the matter (such as the Council Regulation (EC) No. 1206/2001 of 28 May 2001 on cooperation between the courts of the member states of the EU in the taking of evidence in civil or commercial matters, or the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters).
In accordance with the aforementioned articles, the French judge will establish a letter of request that will be sent either directly to the jurisdiction concerned by the letter (if a treaty - such as the above mentioned - allows him or her to do so) or entrust it to the public prosecutor, which will then take care of its transmission. Nevertheless, the obtaining of evidence abroad is subject to a refusal from the foreign jurisdiction under the conditions provided by the applicable convention.Assisting courts in other jurisdictions
What assistance will the civil court give in connection with civil asset recovery proceedings in other jurisdictions?
There are essentially two ways in which civil courts may provide assistance to a foreign court with regard to an asset recovery proceeding.
A court may assist the foreign judge in the taking of evidence. In that respect, articles 735 and seq of the Civil Procedure Code provide for the adequate procedure: a letter of request has to be addressed by the foreign judge to the French Minister of Justice, who will then transmit it to the high court of first instance, which has territorial jurisdiction over the request.
In accordance with the applicable rules of international private law, French judges may grant the enforcement of a foreign judgment rendered in an asset recovery proceeding. As the EU court’s decision will receive automatic exequatur, assets located in France may easily be recovered. Nevertheless, non-EU court decisions will have to meet the conditions set out in the French case of Cornelissen (ie enforcement will only be granted provided that (i) the decision has been delivered by a court rightly designated as having jurisdiction over the matter, (ii) it complies with the international public order and (iii) it does not constitute any fraud to French law).Causes of action
What are the main causes of action in civil asset recovery cases, and do they include proprietary claims?
There are very diverse causes of action in civil asset recovery cases.
When the parties have entered into an agreement, the main causes of action are contract invalidation or nullity (article 1178 of the Civil Code), breach of contract (articles 1217 and 1218 of the Civil Code), and contractual liability (article 1231 and seq of the Civil Code).
When there is no agreement between the parties, the claimant may initiate a tort-based action before the civil courts if such claimant suffers a damage. These actions are based on personal or indirect product liability. Property claims are also an important cause of action when a third party unduly holds an asset and refuses to give it back to the owner (article 2276 of the Civil Code).Remedies
What remedies are available in a civil recovery action?
In the case of a contractual breach, the claimant has a range of remedies (article 1217 of the Civil Code). For instance, the claimant may request that the defendant be ordered to perform the obligations set forth in the agreement or to use the services of a third party at the defendant’s expense. The claimant may also refuse to perform the contractual obligations and obtain either a price reduction, the termination of the agreement or damages. In torts, the claimant has the choice between compensation in kind or damages for material loss. Regarding personal injury, the claimant may only obtain damages.
With respect to civil asset recovery, two kinds of remedies are available: preventive seizure (seized assets are unavailable until proceedings of sale on seizure are initiated) and various seizures (seizure of bank accounts, movable property or real estate).Judgment without full trial
Can a victim obtain a judgment without the need for a full trial?
There are two types of judgment without the need for a full trial: a default judgment and the summary judgment.
- Where a default judgment is issued (ie, where one of the parties does not appear, French procedural law admits two types of situations: if the plaintiff does not appear, the defendant may ask the judge to rule in absence of the plaintiff or to declare the summons null and void (article 468 of the Civil Procedure Code); and
- if the defendant does not appear, the judge has to rule on the merits (article 472 of the Civil Procedure Code), but the decision is subject to an appeal or an opposition (articles 476 and 477 of the Civil Procedure Code).
In addition, a summary judgment may be rendered in the event a plaintiff brings a case to court without serving notice on the other party (article 17 of the Civil Procedure Code). Under these circumstances, a summary judgment will be only provisional and subject to opposition by all interested parties (articles 493 and 496 of the Civil Procedure Code).Post-judgment relief
What post-judgment relief is available to successful claimants?
French bailiffs have the exclusive right to carry out enforcement and preventive measures. This means that bailiffs shall satisfy any request originating from an applicant within the limits of the bailiff’s territorial jurisdiction, unless the request is deemed illegal or abusive (article L.122-1 of the Code of Civil Enforcement Procedures).
Bailiffs have extensive rights that allow them on the one hand to obtain information on the debtor’s financial situation (see question 9), and, on the other hand, to carry out enforcement measures. In that respect, bailiffs may request the assistance of the police in the event of resistance from a debtor (article L.153-2 of the Code of Civil Enforcement Procedures).
To obtain payment, the claimant may use the services of a bailiff who will execute one of the measures offered by the Code of Civil Enforcement Procedures: preventive enforcement measures (article L.511-1 et seq of the Code of Civil Enforcement Procedures), ‘seizure apprehension’, which allows forcing the execution of an obligation to deliver or return a tangible movable property (article L.222-1 and seq of the Code of Civil Enforcement Procedures), seizure of movable property, both tangible and intangible (articles L.221-1 and L.231-1 and seq of the Code of Civil Enforcement Procedures) and seizure of real estate (article L.311-1 and seq of the Code of Civil Enforcement Procedures).Enforcement
What methods of enforcement are available?
Under French enforcement law, there are various methods of enforcement, each of them being suitable to different types of situations. Traditionally, these measures are classified into two sub-categories: measures relating to the direct satisfaction of the creditor and measures aimed at collecting a given amount of money.
As a result, articles L.222-1 and R.222-1 et seq of the Civil Enforcement Procedures Code allow a creditor to obtain direct satisfaction by apprehending the concerned tangible movable property.
A creditor may also seize movable and immovable assets to sell them and obtain satisfaction by the allocation of an amount of money resulting from the sale.Funding and costs
What funding arrangements are available to parties contemplating or involved in litigation and do the courts have any powers to manage the overall cost of that litigation?
French bar rules allow a French attorney and his or her client to enter into an agreement providing for a success fee under strict conditions, since the success fee cannot be exclusive of other fee arrangements (fixed fee, fees paid on an hourly basis, etc).
The use of third-party funding is not common yet in domestic litigation and more developed in international arbitration. Usually, companies may have their legal expenses covered through their insurance policy, which mostly entails the right for the insurance company to take the direction of the case.
In addition, the judge may rule that one of the parties may have to pay the other the ‘unrecoverable costs’ of the procedure, which include, in particular, lawyer fees, and travel and accommodation expenses for the purposes of the trial. As the judge shall take into account the fairness or economic situation of the convicted party, in practice, the amount of unrecoverable costs granted by French courts only cover a small portion of the incurred legal fees.
For answers on criminal asset recovery, see www.lexology.com/gtdt.